Question

Match each ratio to its use. Items may be used more than once.

-       A.       B.       C.       D.       E.       F.       G.       H.    Price-Earnings (P/E) Ratio       -       A.       B.       C.       D.       E.       F.       G.       H.    Working Capital       -       A.       B.       C.       D.       E.       F.       G.       H.    Rate Earned on Total Assets       -       A.       B.       C.       D.       E.       F.       G.       H.    Ratio of Liabilities to Stockholders’ Equity       -       A.       B.       C.       D.       E.       F.       G.       H.    Quick Ratio       -       A.       B.       C.       D.       E.       F.       G.       H.    Rate Earned on Common Stockholders’ Equity       -       A.       B.       C.       D.       E.       F.       G.       H.    Current Ratio       -       A.       B.       C.       D.       E.       F.       G.       H.    Ratio of Net Sales to Assets       -       A.       B.       C.       D.       E.       F.       G.       H.    Dividends per Share       -       A.       B.       C.       D.       E.       F.       G.       H.    Earnings per Share (EPS) on Common Stock

A. To assess the profitability of the assets. B. To assess the effectiveness in the use of assets. C. To indicate the ability to meet currently maturing obligations. D. To indicate the margin of safety to creditors. E. To indicate instant debt-paying ability. F. To assess the profitability of the investment by common stockholders. G. To indicate future earnings prospects. H. To indicate the extent to which earnings are being distributed to common stockholders.

Answer 1

Answer:

Price Earnings (P/E) Ratio	To indicate future earnings prospects
Working Capital	To indicate the ability to meet currently maturing obligations
Rate earned on Total Assets	To assess the profitability of the assets
Ratio of Liabilities to Stockholders’ Equity	To indicate the margin of safety to Creditors
Quick Ratio	To indicate instant debt-paying ability
Rate Earned on Common Stockholders’ Equity	To assess the profitability of the investment by common stockholders
Current Ratio	To indicate the ability to meet currently maturing obligations
Ratio of Net Sales to Assets	To assess the effectiveness in the use of assets
Dividend per Share	To indicate the extent to which earnings are being distributed to common stockholders.
Earnings per share (EPS) on Common Stock	To assess the profitability of the investment by common stockholders